In the latest quarterly update of our Global Esports Market Report, we reported the accelerating shift of business models from direct advertising to indirect monetization through media rights sales. This has led to a slight revision in our individual revenue stream forecasts. However, the shift has hardly affected our overall revenue projection for the global esports economy, which still stands at approximately $900 million this year and $1.7 billion by 2021. These conclusions are a result of the continuous analysis of our latest partner data and proprietary research, as well as actuals from esports organizations. Our most recent estimates can always be found on our key numbers page.

Esports Content Rights Grow 89% This Year at Cost of Direct Advertising

Content rights are sold by game publishers directly or through independent event and league organizers such as GPL, ESL, and Dreamhack. Buyers consist of a growing group of traditional and digital media companies interested in acquiring rights both locally and on a global scale. By selling these rights, the publishers and organizers do not receive a share of direct advertising revenues from streaming their esports content. What does this shift towards indirect monetization mean for Newzoo’s estimates? We have decreased our advertising revenue forecast by 5.3% for 2018, which still shows a healthy 17.3% year-on-year growth.

On the other hand, the industry’s newfound focus on content rights—and the revenues that come with it—means that our 2018 forecast for esports media rights revenues has increased by 9.5%, now totaling $176 million (an 88.5% year-on-year jump). The impact on 2021 is relatively small, as illustrated by our updated esports media rights forecast of $420 million, compared to our previous forecast of $396 million.

While revenues from esports teams and other smaller organizations at the heart of the ecosystem are still under pressure and profitability is scarce, serious money is exchanging hands at the top of the esports pyramid for events and leagues. Both for tournaments and leagues, most revenue growth will be driven by top-tier events. The biggest opportunities for content buyers could now lie in the second- and third-tier tournaments and leagues, as these events have local power or serve a more niche audience.

Adding to buyers’ interest in esports content is the fact that content for almost every major traditional sports league (from soccer to baseball) is tied up in contracts for the next few years—and that’s at the very least. Esports, on the other hand, has contracts aplenty that broadcasters (endemic and non-endemic) are now vying to snatch up.

What’s more, new direct monetization options for content have started to appear across the industry, including premium features and content passes. The Overwatch League All-Access Pass, for instance, gives viewers access to exclusive shoulder content, additional camera angles, and a personalized viewing experience. In China, streaming platforms such as Huya and Douyu are primarily focused on direct consumer monetization. This more direct ROI will further justify an increase in content rights spending, but this depends on whether consumer monetization is included in media rights deals.

Newzoo’s New Tiered Classification for Esports Leagues and Tournaments

Newzoo maintains and enriches a database of more than 1,200 individual esports events and leagues globally. The individual events are tagged—among other things—with the participating franchises and sponsors, and are rated by attendance, prize money, and viewing hours. This classification system helps our clients understand and analyze the potential of different esports competitions, which informs our clients’ content rights strategies.

On the highest basic level, we tier events based on viewership—yearly for leagues and main event viewership for tournaments (including group and knockout stages). We used our Game Streaming Tracker to divide leagues and tournaments alike into three tiers: top tier, mid tier, and other. Factors that determine each tier’s growth include the number of events and revenue generated from sponsorship, the buying of media rights, and ticket sales. We now classify leagues and tournaments as follows:

What Does the Future Hold for Esports Leagues and Tournaments?

The Overwatch League claims one of the industry’s biggest deals to date, with Twitch paying a reported $90 million for the two-year deal. We expect to see more and bigger deals in the coming months and years. In fact, most of the growth in top-tier leagues will be driven by the increasing appeal of existing leagues—rather than from mid-tier leagues becoming top tier.

In 2017, esports tournaments generated twice as much revenue as leagues. By 2022, though, revenues from leagues and tournaments will be on par. Still, the number of new tournaments will be higher. Tournaments currently account for 41% of all esports sponsorship revenues (including team sponsorship). Looking at top-tier tournaments alone, sponsorship and media rights will be jointly responsible for revenue growth. Interestingly, top-tier tournaments alone make up 13% of all sponsorship revenues.

The Newzoo Global Esports Market Report

Looking to create/optimize your esports strategy and positioning? With our annual Global Esports Market Report, we fill the demand for an accurate and realistic overview of the esports economy and its future potential—on a global and regional level. The report provides an insightful analysis of the esports market, including revenue and audience estimates, industry developments per region, top events and franchises, and the key trends shaping and disrupting the industry.

In addition to the report, subscribers receive a quarterly update, access to our Global Esports Market Dashboard, and tailored support from our expert team of analysts. Newzoo also provides its esports clients with a variety of other esports intelligence services, including Consumer Insights on 28 countries/markets.

Learn more about the scope of the report, including the methodology, in this factsheet.

Subscribe to our newsletter

Join over 15,000 professionals and stay up to date with our latest news & insights

Newzoo uses the information you provide to us to contact you about our relevant content, updates, and services. You can unsubscribe from these communications at any time. For more information, check out our Privacy Policy.